AHDB Pig Market Weekly

AHDB Pig Market Weekly - 27 March 2014

UK pork imports in January reached 29,600 tonnes, up 3% compared with a year earlier. The strong import market was largely a result of higher shipments from Germany, up by nearly a third on last January. This was the first time since September that Germany was the main supplier, accounting for over a quarter of UK imports.

UK exports remain strong in January

There was also a year-on-year increase in Dutch deliveries but these increases were somewhat offset by 18% and 6% declines from Danish and Irish suppliers. The total value of UK pork imports in January amounted to £61 million, up 7% on a year earlier. In addition to the higher volumes imported, the unit price increased by around 4%, despite subdued EU pig prices.

Bacon imports during the month were 1% lower on the year at 19,100 tonnes, with the Dutch and the Danes the main contributors. However, bacon imports from Germany were reduced by a third on a year earlier. Sausage shipments were also down by 1% year on year, while imports of other processed products increased by a quarter compared with January 2013.

At 15,700 tonnes, the pork export market performed strongly again, with a 15% increase in shipments compared with January 2013. Higher volumes were supplied to both EU and non-EU countries. The main growth market on the continent was Denmark, presumably product destined for re-export. China led growth in Asian markets, with shipments up 44% year on year to 2,400 tonnes, followed by Hong Kong and the Philippines.

Offal exports, on the other hand, slowed, down by 31% compared with January 2013. The market particularly suffered from lower EU demand, which was especially high last year. Meanwhile, supplies to China continued to grow, more than tripling to 1,400 tonnes.

Promotions support fresh pork sales

Sales of pork for the December-February period fell slightly on the year, according to the latest data from Kantar Worldpanel. The drop in purchases was, however, restricted to sales of frozen pork, with demand for fresh produce at similar levels to last year. Sales of fresh pork have been sustained partly due to an increase in promotional activity in three of the big retailers, with pork bought on promotion now accounting for almost half of all sales. Consumers continue to be price-sensitive, reflected in tightened household budgets, with shoppers looking for better value for money. The latest data show consumers switching to relatively cheaper products. Purchases of beef and lamb roasting joints both fell over the period, while demand for pork roasting joints increased by almost 4%.

Despite only a small increase in the quantity of sausages bought, consumers spent 8% more over the 12 week period than they did a year earlier. Shoppers have shown an increase in demand for the higher priced premium and standard ranges, moving away from economy sausages. The shift has partly been driven by an increase in promotional activity for premium and standard ranges but also sales growth among the discount retailers, which tend to focus on higher quality sausages.

The amount of bacon rashers bought over the December-February period fell by 3% compared with last year. The drop has in part been driven by less promotional activity among key retailers over the period. However, there has also been a shift in shopper habits towards discount retailers. Although discounters make up only a small proportion of the overall market, their sales of bacon rashers increased by 30% over the year. Promotions from discounters have focused on price reductions.

UK pig price

The EU-spec DAPP for the week ended 22 March edged up to 162.86p per kg, up 0.3p on the previous week. Finished pig prices increased for the first time since the end of January, having declined by 5p since then. Compared with the same week last year the annual difference narrowed slightly to 5p per kg. The small uplift represented the delayed seasonal increase in the market, aided by some recovery in the EU pig price. At 163,600 head, estimated weekly slaughterings were in line with recent weeks. Although this was 5,000 down on the same week a year earlier, that was the week before Easter, when throughputs are normally slightly higher in anticipation of plant closures. Carcase weights, at 80.65kg, were down marginally for the week ended 22 March, although still 0.84kg more than the same week in 2013. Nevertheless, the relatively tight supply situation is also likely to have helped the market last week.

The 30kg weaner market strengthened to £56.77 per head for the week ended 22 March. This was a week-on-week change of £1.51 per head. The rise in prices is likely a result of lower volumes traded and the annual difference in prices increased to £9. In contrast, the price of a 7kg weaner fell to £40.85 per head, down 28p on the week earlier.

Cull sow prices in Great Britain are still not available but the German sow market moved up sharply last week, by as much as 6%, which should provide a boost to the UK sow market.

UK slaughterings down in February

UK clean pig slaughterings in February totalled 781,550 head. This was 1% lower compared with the same period in 2013. With revisions to the previous month’s figures, this means that throughputs have declined year-on-year for four consecutive months. This reflects the drop in the size of the UK breeding herd during 2012 and early 2013, when feed prices were particularly high, hitting producer margins. While slaughterings were virtually unchanged on the year in England, there were declines of 8% and 3% in Scottish and Northern Irish throughputs.

Adult pig slaughterings totalled 19,400 head, down 5%, or 1,000 head, compared with the second month of last year. These figures are in line with the December census which not only showed a decline in the breeding herd but also a fall in maiden gilts, suggesting less sow replacement. The sow and boar kill has now fallen sharply for the last eight months. Despite lower throughputs, a 2% increase in carcase weights meant that the total pig meat production in the UK amounted to 66,200 tonnes, up 1% cent compared with February 2013.

Lower Danish pork exports in 2013

Danish pork exports fell for the second consecutive year in 2013, to 1.1 million tonnes, although the reduction of 1% was much less than the 15% in 2012. The scale of the fall in 2013 was mainly the result of a much smaller drop in production, of only 1%, whereas in 2012 net production was down as much as 7%. Volumes shipped to the EU were down by 4% to account for 71% of the total compared with 73% in 2012. Germany remained the largest market and although Danish shipments declined by 2% its market share of the German market was unchanged. In the case of Poland and the UK, Danish shipments were down by 4% and 10% respectively.

On the other hand exports to non-EU markets increased by 5% in spite of a fall of 2% in shipments to its largest market, Japan. Virtually all the growth recorded on non-EU market stemmed from higher purchases by Russia (up 51%) and China (up 47%). The value of Danish exports totalled €2.6 billion in 2013, also down 1% as the average export price was unchanged.

In contrast, Danish pork imports increased in 2013, up 24% on the previous year, although total trade is much smaller at only 64,000 tonnes. Germany is by far the dominant supplier to Denmark with a 76% market share and its shipments were up 33% year on year.

Danish live pig exports continued to increase in 2013, up by 4% to 10.4 million head, although this also represents a much smaller rise than in 2012 when trade was up 14%. Exports have increased sharply over the last ten years as in 2003 they were nearer 2 million. Weaners dominate this trade, accounting for 95% of the total, and while shipments to Germany were down 3% this was more than offset by a 32% increase to Poland where there were major shortages of domestically reared weaners.

Feed market update

May-14 wheat futures closed at £169.75/t on Tuesday, up marginally from £167.95 last week. Nov-14 wheat futures closed at £161.50/t an increase of £2.50 from last week’s price. Recent reports have revealed that Ukraine’s grain harvest could fall to 57Mt this year in comparison to last year’s harvest of 63Mt. According to APK-Inform, lower levels of lending from banks have led to a reduction in planting, the key reason for a fall in grain output. Continued dry conditions in the US led to further deterioration of the winter wheat crop in several of the major growing states; it is currently forecast to fall by 4.3Mt this year (USDA data).

May-14 maize futures remain unchanged from last week at $191.54/t. Various forecasts made by analysts indicate that US maize plantings will be down by around 3 million acres in 2014. In other global news, China has rejected 21.8kt of US maize due to an unapproved genetically modified strain found in shipments; this brings the cumulative rejection total to 908kt since Nov-13.

UK feed ingredient prices have seen a slight decline with rapemeal prices down to £249/t (14 March) from £252 the previous week. On the other hand soyameal prices have increased by £8 from the previous week to £412/t (21 March). In Brazil, harvest in the top soyabean producing state of Mato Grosso is complete. The Argentine soyabean harvest has begun in some regions, although excessive ground water is impeding efforts in these areas.

To read more about the latest developments in the feed market click here.

March Pig Market Trends out now

The March edition of Pig Market Trends (PMT) was published on Tuesday. As well as the usual summary of developments in the UK and EU pig markets and the global feed market over the last month, the new issue includes more detailed articles on:

UK pig numbers. Latest figures from Defra for the size of the UK pig herd in December 2013, contain some surprising results, with total pig numbers up 4% but the breeding herd lower. This suggests that pig supplies will remain tight through most of 2014. This article looks at what the figures may mean for the UK pig market.

GB herd performance. According to latest physical performance data, the productivity of GB breeding herds improved again during 2013. In contrast, the performance of rearing and finishing herds was slightly lower than the previous year. This article looks at the figures in more detail.

Russia has featured prominently in news headlines in recent weeks, both globally and within the pig industry. Its decision to ban EU pork imports in the wake of ASF cases in Poland and Lithuania is only the latest in a series of import restrictions in recent years. This and other developments in the Russian market are examined in more detail.

EU pig census. Eurostat have now published the December pig census results from all 28 EU Member States. The number of pigs was marginally down on the previous year and the sow herd was down 2%. However, this is smaller than the falls in the last few years. This article looks at what this might mean for EU production and the pig market.

Out of home trends. Overall, consumers ate out less often in 2013, impacting on red meat consumption, but pork bucked this trend. Although bacon, ham and sausage servings all declined, fresh pork dishes showed double digit growth. This article analyses trends in the foodservice market.